The argument goes as follows: the fiscal cliff provided the most
favourable possible circumstances for Democrats to push for a tax
increase.

Nevertheless, Democrats set their initial sights rather low, by
pushing for tax increases only on income above $250,000 per year.

And even so, they had to compromise, and were only able to get
tax hikes on income above $400,000 for individuals ($450,000 for
couples).

The once-temporary Bush tax cuts were made permanent for income
below that level. This will not provide enough revenue over the
long term to support America's welfare state (Medicare, Social
Security, Medicaid) at anything like current levels.

Yet if Democrats couldn't get more revenue now, under the best
circumstances possible, they'll never get it in the future with
the pressure off. Hence, the welfare state is doomed.

[T]hese negotiations amounted to a test of liberalism’s ability
to raise revenue, and it isn’t clear that this outcome
constitutes a passing grade: If a newly re-elected Democratic
president can’t muster the political will and capital required to
do something as straightforward and relatively popular as raising
taxes on the tiny fraction Americans making over $250,000when
those same taxes are scheduled to go up already, then how
can Democrats ever expect to push taxes upward to levels that
would make our existing public programs sustainable for the long
run?

Mr Kwak thinks the failure to get more revenue "sealed the
fate of Medicare—as well as Medicaid, food stamps, and perhaps
even Social Security." Without more revenue, we're guaranteed an
eventual debt crisis, and at that point government will slash
safety-net programs:

For decades, conservatives have been trying to "starve the
beast"—choke off the federal government's revenue stream so that
rising deficits would force Congress to cut spending. They just
got a big help.

The invocation of the "starve the beast" theory here is on the
money. But I don't think it means what Mr Kwak thinks it does.
It's been clear for a decade or so that starving the beast
doesn't work: the absence of revenues does not lead government to
cut spending, particularly not on its big-ticket functions of
defence, Medicare/Medicaid and Social Security, which account for
over 60% of the budget.

And one thing we learned during the fiscal cliff negotiations is
while Democrats are reluctant to talk about raising taxes,
Republicans are so terrified of cutting entitlements that they
literally will not name any entitlement cuts they might
want to make.

The one gesture towards entitlement cuts in the fiscal cliff
negotiations was obscured from voter ire as a technical
"adjustment"—moving Social Security cost-of-living increases to a
chained-CPI standard—and yet at the first whiff of Democratic
opposition, Republicans turned
and ran like they'd cut the wrong wire on an IED.

"What we learned," as
Matthew Yglesias puts it, "is that even with a Democratic
President in the White House who's eager to cut spending on
retirement programs they still don't get cut. That's how robust
the welfare state is."
Jonathan Chait has a similar take: "At some point, we will
likely face a choice of cutting benefits or raising taxes, and in
the face of a simple, zero-sum choice like that, voters would
overwhelmingly favor tax hikes."

But Mr Chait goes on to make a different point: while it looks as
though entitlement programmes are nearly impossible to cut, just
about everything else the government does is much more
vulnerable. Everything from food inspections to foreign aid to
environmental regulation to legal defence for the indigent to
scientific research to the national parks to education to road,
rail and air infrastructure to...pretty much everything.

These programmes are diverse and often have small constituencies.
There is, basically, a lot of stuff that the government does. And
when you ask the public, you find that they want the government
to do these things. But public attention is a very limited
commodity; it's impossible to actually marshal public attention
to each of the individual programmes that get cut when
"government" gets cut.

What's happened over the past 30 years, and in an accelerated
tempo over the past two years, is that everything the government
does apart from wars and transferring money to old and poor
people has gotten creamed. The savings are trivial in comparison
with the overall long-term debt picture, which is almost entirely
a function of Medicare and Medicaid spending.

But the cuts have effectively curtailed the vision of liberals
who want government to do things like invest in basic scientific
research, improve infrastructure, kick-start green technology and
support education. In that sense, it's true, the ability of
Republicans to block Democrats from expanding the tax base has
been a conservative victory.